A state senator is proposing reforms for Oklahoma’s payday lenders.
Sen. Kevin Matthews has filed a bill that would institute a 24-hour waiting period between a borrower paying off their payday loans and a lender giving them a new one. It would also limit borrowers to 90 days of indebtedness a year with a 365-day waiting period between a borrower’s final loan being paid off and a lender being able to give them a new one.
"These kinds of loans may have their place, but what we often see is people get into a situation that they just can't get out of," Matthews said. "Trying to slow down that spiral."
Payday lending began in Oklahoma only in 2003, but companies loaned $392 million in 2014. While that represents 945,000 individual loans, lenders reported only 162,000 customers.
An Oklahoma Policy Institute analysis found three in five loans go to borrowers taking out a dozen or more a year.
David Blatt with Oklahoma Policy Institute said if Oklahomans aren't able to access payday loans because of the potential restrictions on lenders, they could instead ask their employers for advances, borrow from family or friends, or get a small loan from a bank or credit union.
"There's lots of options that do not trap people into this debt treadmill at really high rates that just serves to undermine wealth and leave people worse off than they already are," Blatt said.
The APR on payday loans runs about 350 percent, and there are more than 300 lenders in Oklahoma.
